26/11/2010

I write further to the article published in Property Week criticising Ardeshir Naghshineh – Chairman of Targetfollow – for being too proud. I find it bizarre for anyone to criticise a brilliant property man for being too proud. Surely being proud, hardworking and motivated are the qualities that should be admired and not criticised.

I believe the criticism should be directed at the faceless bank officials who made yet another bad decision by putting part of Mr. Naghshineh’s property empire into administration. On the one hand, these bank officials lend irresponsibly and excessively when property prices are rising, only to become irrationally fearful and start unnecessarily repossessing properties when they think the property market is no longer rising.

It has been proven time and time again that allowing competent property entrepreneurs the time and support they need to sell their assets themselves, is a far better and less costly process than appointing receivers with no knowledge of the properties they are selling. Unfortunately, banks are unduly influenced by short term market conditions, they become impatient and unreasonable at the time when they are most needed.

It is undeniable that most of the decision makers in the banks have no practical experience in the property industry and base their decisions solely on the strength of the paperwork put in front of them. In my open letter to Mr. Brown (then Prime Minister) published in the Times on 11-03-09, I argued that a fundamental change in the way which banks lend to the property industry was imperative as no amount of paperwork could possibly replace the expertise and experience required in deciding who to lend to, and understanding the viability of the property they are lending for.

I now believe that there is also an urgent need for change in the way banks place property companies into administration. In my opinion, it is important for the Government to set up a committee consisting of members with expertise and property experience to independently examine the bank’s decisions before they are allowed to place large property companies into administration.